Shopping at ColesWorths? What’s the real cost?

Fintan Magee

It’s a race to the bottom; to be the cheapest. In Woolworths parlance it’s “Cheap Cheap” whilst over at Coles aging rock-stars are pointing “Down Down” at their genitals with large red hands. The two dominant players in the Australian supermarket industry are engaged in a price war and most of us won’t bemoan the fact that both have decreased their prices over the last three years – Woolworths by 11 per cent and Coles by 6 per cent.

coles v woolcoles v woo

However, there is a cost to be borne in what most would view as healthy competition. Consider the plight of their channel partners; farmers, manufacturers, processors and distributors. Coles and Woolworths are the 19th and 15th biggest selling retailers in the world and, between them, command a staggering 74% market share of our supermarket/grocery sector. They both wield incredible power over their channel partners with a number of cases exposing their questionable behaviours.

Both companies spent a good deal of 2014 defending their behaviour against actions brought against them by the ACCC. Late last year Coles was fined $10 million plus $1.1 million in costs for two separate claims concerning allegedly unreasonable demands for payments from its smallest suppliers. At the same time Woolworths was being investigated and roundly condemned for its pressure on produce growers to contribute 40c per crate to pay for a Jamie Oliver advertising campaign. This is on top of the 2.5% of sales growers are already paying as a “marketing fee”! There was ample evidence that many farmers paid purely out of fear of losing contracts.

wool jaimie

Earlier in the year Coles lost a court case where they had claimed that bread was “fresh baked” when in fact the raw ingredients had been imported frozen from Ireland. Another local supplier had been replaced!

The instances that are front of mind with most of us, however, are the $1 milk and 85c bread campaigns that both companies promoted. The cheap milk campaign in particular led to significant reductions in farm-gate returns and threatened the livelihood of many farmers. They were receiving 20c-30c per litre of milk from both companies which is actually below the cost of production – simply unsustainable.

The pressure on producers to deal; with “Colesworths” is enormous and leads to other bizarre outcomes. Contract farmers are forced (contractually) to be ready to fill the largest possible order from the retailers. In reality most orders are smaller and the grower is forced to destroy the balance of the crop not purchased. Finally, “home Brand” or private label products have their own drawbacks. The chosen supplier must supply the product at vastly reduced margins and a further consequence is that there is less room on the shelves for smaller independent brands to gain exposure.

Coles and Woolworths would argue that they are merely responding to customer demand and, from a scientific view, they both do so very successfully. However, next time you buy your “cheap cheap” milk or bread, or standardised fruit and vegetables that are priced “down down” will you ask yourself what the real cost is?

vote-woth-your-wallet_thumb

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49 thoughts on “Shopping at ColesWorths? What’s the real cost?

  1. A very informative post. More campaigns like the one in Britain , #backbritishfarming used to encourage people to buy food products produced within Britain should be encouraged to save jobs and help local businesses flourish. Other campaigns in the UK use tag lines such as “be British buy British” and these are written up in super markets reminding shoppers of how they can help local farmers and small food suppliers. These campaigns do have a positive effect as they in a sense make people feel responsible for the consequences of shopping for products that may seem cheap but at the same time have adverse affects that may be felt through the society

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    • Thanks for the reply. I think these campaigns are useful, although they are only ever short-lived and temporary in nature. Dick Smith has been trying to get his Aussie Grown Foods in more prominent shelves in ColesWorths for years with limited success. As I alluded to in the blog, until consumers change their buying habits, the power of Coles and Woolworths over their channel partners will remain.

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  2. Great post. I don’t like the power oligopolies (which is a state of limited competition if you’re like me and had to look this word up 🙂 ) or monopolies can influence in the market place, especially when they exert the power over our Aussie farmers such as both Coles and Woolies have been found guilty of doing. Not only do they squeeze the farmers for their livelihoods, I have found the quality of their supposedly fresh produce somewhat less than desirable – having to throw out some fruits and vegetables less than half a week after purchase. It’s also very difficult to know where the fresh produce is actually coming from because even fruit is labelled “Product of Australia” – does that mean the annoying sticky labels were put on to imported fruit here or does it mean it’s Australian fruit? I’d rather buy Australian – and would welcome a campaign similar to that mentioned by sophiatiwana above.

    It’s difficult to find good alternative to the supermarkets that can last the distance in the price wars waged against them by the two big supermarkets, with many local greengrocers and butchers shutting shop. But after being so annoyed at having “fresh” produce going off within half a week on more than one occasion I am thinking seriously about giving it a try. Hopefully then the real cost will come back to bite ‘ColesWorth’.

    Liked by 2 people

    • Thanks Lynette.

      I have seen our local greengrocer close his business in the last twelve months and there is a myriad of reasons for that – much of it due to the behaviour of ColesWorths. He was not a channel partner but a small competitor but his margins were squeezed as a result of the big two and the changing habits of his customers. The quality issue you refer to is a result of the small range of channel partner growers that are chosen and the particular specifications for the produce that ColesWorths insist upon. The volume of waste that results is staggering.

      Liked by 1 person

  3. I just liked the way you have discussed about the supermarket chains and their distribution & logistics drama . In most sectors this is the case for producers/Manufacturers who are getting very less price than the production cost . We customers just think about the good quality product at lowest price and don’t bother about the source of it because its a regular shopping and our aim is extra weekly savings . Woolworth’s reduced 5% more than coles in pricing as they have more stores .It must be noted both are copying the marketing strategies in retaining and attracting customers, cheap cheap was started after down down campaign and also 0.85$ breads was first started by wollys . Most people now a days prefers Aussie grown products and these supermarkets are already promoting using these type of tag lines to attract the customers ..

    In future both of them must consider customers and producers before deciding pricing , else it will go even worse and quality of products effects the consumers . These producers/farmers must common laws that should be agreed by these supermarkets before negotiation prices . Its a tough task for supermarkets to keep both Customers and Producers happy ..

    Liked by 1 person

    • Thanks for your post. Yes I agree that both supermarkets have suddenly jumped on the “buy home grown” bandwagon. Perhaps, in part, as a response to the negative punlicity they have both attracted in recent times. However, is it fair for Woolworths to charge their contract growers an extra 0.40c per crate to fund the Jamie Oliver advertising campaign? Is it fair that Coles insist that a grower be prepared to provide 1200 tons of lettuce at harvest, then to provide an actual order for 920 tons? The grower is forced to destroy 280 tons.

      I think there is ample evidence that your prediction regarding quality is already becoming a reality.

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      • Not at all they shouldn’t charge from growers ,instead Woolworths should use their companies revenue for it . And regarding coles their act towards farmers is disgusting , it is not the growers loose the money but grown lettuce is destroyed ,i feel they should have solved this problem internally . Now it is negative affect for them which will be in customers mind for some time .

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  4. I find this very hard to believe. The prices are not really comparable unless you go to a shopping centre with both supermarkets as they are directly competing.
    It also depends if you prefer to buy generic branded products, as Woolworths Homebrand and Select are cheaper than Coles Smart Buy and Coles brand, and also cheaper than Aldi.
    And in cases like the vegemite where you are comparing smaller sizes, you should have looked at the largest jars in each store to ascertain the value, as it is widely known that if a product is smaller the value is not the same.
    I have never had any experience of Coles being cheaper, Woolworths has over 200 more stores than Coles, and hence has greater purchasing power.

    Liked by 1 person

  5. Coles and Woolworths are place I tried to avoid at all costs. You never walk in and only purchase what you wanted. Well I don’t anyway. There adds are great and very entertaining, there marketing strategies target the very young viewers as well- Being private nanny and having little kids singing and repeating the catch lines, is one way they shows us how influencing they are.

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  6. Mate, i cannot agree you any more. I have been dealing with Woolies and Coles for years, and can strongly feel the impact on the business of our company by the price war, eg:. cutting down the suppliers’ margin, forcing frequently to run the big promotion, more and more cheap private labels products… Mind you, when we running the big promo, like half price, we actually lose money by selling each product. However we have to run this kind of promo to improve the sell of units per week to be able to stay in the category.

    They are just holding too much power! It will become worse and worse…

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    • Thanks for your post.

      I think the evidence shows that they wield far too much power, particularly over their channel partners. If this continues you could be correct in that the situation will deteriorate – both for channel partners and consumers. As the illustration above suggests, IBISWorld believes that there is room in the market for a third player and Aldi has articulated its goal to be that successful third player. Thus far the jury is out on their treatment of channel partners. This could imply that they have good relationships with them – or the stories are still to make headlines!

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  7. Very touching blog indeed. Farmers fall victims of price war between the two retailers in our country. As I come from farming background, the costs for producing crops and milk is daunting for farmers. therefore, any prices that do not pay back farmers’ hard work are utterly deplorable in my view. I hope farmers find some new contractors and markets to sale their hard earned produce to because lack of alternate markets has unfortunately driven down prices . As a consumer, I would to pay extra cents to support those producers.

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  8. Very interesting post.
    It is true that Coles and Woolworths have invested significantly in food imports, especially in the processed fruit and vegetables category, pursuing international sourcing opportunities to compete with national brands. The influx of low-cost imports and the downward pressure on prices through the wholesale bypass have contributed to the erosion of farmers’ margins. As a result, declining terms of trade has forced smaller growers to exit.
    I prefer buying Aussie food, not only because I want to support local farmers but also because I believe that local fruit and vegetables are fresher than imported ones, even they are more expensive. I totally agree with Lynette that sometimes we have to throw fruit and vegetables only three or four days after the purchase. I guess the real challenge for Coles and Woolworths is that consumers are becoming increasingly concerned about where the products are coming from. We have the right to know what we have paid for, whether the product is cheap or expensive, at least we need to have the option.

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  9. Nice post..
    I’d personally rather choose Aussie farmers as i trust in local product.
    To support it, the fact is as cited from an article, Australian Made (2012) shows that a major percentage of Australian buyers have a strong preference for purchasing locally made products, but some argue that it is fairly difficult to identify really Australian goods. ‘Australian Grown’ logo is strongly recognized by most of Australians as well as trusted by most of genuine Aussie product identifier. However, one of the difficulty is knowing where the fresh products come from. Since the customers looking for the quality of the products, therefore some of them may not care who the products made by.

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  10. Enlightening blog I must say! Its not just the farmers but we are all manipulated by these stores. Have you ever thought of the location these most sold out items are placed. Right at the far end of the store. So to buy them you would cross almost half of the store and at an impulse would definitely put somethings in your basket. So they make profit by exploiting farmers and manipulating consumers.

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  11. I don’t really like favouritism, but I have to say that that’s the best blog I have read so far. Really well written, lots of facts and a topic I am very interested in. It makes you want to rush down to the IGA ASAP!.
    I was reading that Australia needs to get with the program with our supermarket watchdog. Apparently US and the UK have much tougher laws protecting suppliers and farmers. I say apparently because i have shopped at Tesco and Sainsbury’s and those supermarkets have far less variety of each product type on their shelves. However, I think The ACCC should be given more power to stop the bullying. And yes, it is us, the consumer who should be thinking about the suppliers and their families, not the cheaper prices. At the moment it feels like Colesworths may just take over completely. Then what will happen to prices? It is seriously worrying and its hard to believe it is allowed to happen.

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    • Thanks for your post.

      I doubt whether we will see any action from the parliament or the ACCC in curbing the power of ColesWorths. Yes, I agree that if left unfettered there is no doubt that prices will rise. That is the natural progression when competition has been removed and there is ample evidence of this by these two companies in selected markets and segments. What of the channel partners if this continues? In one scenario they may be better off with higher prices all round. Riddle me this – would ColesWorths pass some of the margin on to their channel partners?

      My comments on Aldi above apply to this post as well.

      Cheers.

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  12. nice blog and you make some valid points. There appears to be many supporters of “buying Australian made”, it just seems to be made hard to ether identify these products or pay more for them. Dick Smith is an avid supporter of Aussie farmers http://www.dicksmithfoods.com.au/. Unfortunately, often these products are placed low down on shelves within coles and woolworths making it hard for consumers to buy local

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    • Ironic isn’t it? Dick Smith was the first to import cheap electronic products into Australia from Asia and is often blamed for the demise of the local manufacturing industry. Yet he is championing Australian made – a walking contradiction.

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  13. Reduced cost also comes at a cost! it is common to see big players in the channel exploiting a weaker member also called coercive power, but the transaction cost analysis can provide a better understanding of the situation, such as what if the cost was not reduced by the supplier(farmer) and in-effect the woolworth lost the competitiveness on that part of business which led to fall in sales or losing market share, this could possibly lead to break the chain between the supplier and retailer, now if the supplier has to find another channel of supplies which will incur cost, and negotiate the terms, and above all time cost, if all these cost are less than reducing the cost to initial supplier than it is better not to reduce cost in first instance otherwise it is better to reduce cost to stay in the market. But in all this transaction a sense of uncertainty is their which might have a big effect on decision made.

    Sometimes it might be helpfull also to some businesses to conform with big partners conditions, one example is the manufacturers of some specialised oils which are sold in very small quantity and the consumers are dispersed unevenly, therefore neither the consumers had the knowledge about the product availability nor did the manufacturers knew where to go, but then the manufacturers of these oils tied up with Amazon with condition of giving them products with low cost and they eventually survived their collapsing business.

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  14. Bargain power of big grocery chains is a serious problem. Especially in Germany, where competition among food discounters is massive and a lot higher than in Australia. Recently, the cartel office finished an investigation on the power of the dominating discounters in Germany such as Aldi, Lidl etc. They came to the conclusion that the dominance of these big discounters accounting for 85% of the market will lead to a future deterioration of overall competition because the big discounters use their market power to dictate prices with regard to their suppliers.

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    • Thanks for this and interesting to hear that similar problems exist in Europe. However, at least there are multiple retailers present in these markets whereas we are stuck with two who share nearly 75% of the supermarket industry. European farmers seem to be more organised into “trade” associations than their Australian counterparts and they are certainly more protected by their governments (esp. France).

      Maybe Aldi can change this.

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  15. Thank you for share~
    I also had to consider this issue, resulting in the price of the war in the retailer, who will be the victims of which. In order to better win customers, each retailer will drive down prices as much as possible. As you said, there is a price of war on both retailers and farmers has become the ultimate victims. For farmers, they are producers and crop production is very difficult, when the retailer down the purchase price, the profits of farmers will suffer. But as the retailer is concerned, when they are half-price discounts and sales when, in fact, they also loss money,

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  16. I just see this as business. Yes it sucks for the farmers and others who take on these costs in the supply chain, but I bet if they were offered the choice of not having a contract with Coles and Woolworths they would not take it. Because these supermarkets dominate the market, they sell more milk and bread then anywhere else and therefore, more of the farmers produce gets sold which is good for farmers. This is just one of the unfortunate pitfalls of doing business with the big players.

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  17. Great blog and a very interesting topic. I have to admit that I’m very much motivated by price. I am also a very passionate advocate for competition and rejoiced when Aldi opened in Australia, as I thought that Coles and Woolworths had enjoyed their oligopoly for far too long. Unfortunately the laws of economics will always prevail and low prices for standard consumables e.g. milk, fruit & veg will always be a key factor in driving consumer choice.

    Check out this video on William Morris as he had some very interesting ideas regarding economics, consumerism and work place motivation.

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  18. The food supply chain is a good topic to discuss. In NZ (i know some won’t be familiar with the model) Fonterra https://www.fonterra.com/nz/en have a monopolistic situation in the dairy industry, so farmers supply them and get a payout (they are shareholders under a co-operative model) and Fonterra supply supermarkets.

    Interesting at the moment the payout farmers is forecast nearly halve compared to this time last year ( http://www.fonterra.com/global/en/Financial/Farmgate+Milk+Price ) the suggestion is that milk prices will not drop.
    The media has a large part to play in our expectations about what is going to happen, look at this poor reporting – two articles one day apart stating two different outlooks, the first suggesting cheaper milk on its way, then stating it is unlikely to reduce based on distribution costs.

    http://www.stuff.co.nz/business/farming/dairy/64051406/cheaper-milk-on-its-way

    http://www.stuff.co.nz/business/farming/dairy/64016299/Milk-price-cuts-unlikely

    Earlier in 2013 when dairy prices were on the increase , the media were reporting that prices were increasing based on the payout.

    http://www.3news.co.nz/business/retail-milk-prices-up-as-fonterra-increases-payout-2013092417#axzz3aErZrE48

    So supermarkets increase prices when the payout goes up, but don’t reduce it because of distribution costs when it drops?

    Seems very inconsistent to me.

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  19. Urgh… Colesworths indeed! Their behaviour in the market over the past years – while the majority (clearly) of consumers will continue to shop there – has been a pretty nasty case study in market power dynamics, squeezing the channel partners to try and preserve CWs (already) sizeable profitability while they drop prices to drive foot traffic. So while they’re scrambling with new (and ever more ridiculous) ad campaigns and sales promotions to pull people in, they’re also aiming to recoup the cost of their pricing and promotional strategy from their channel partners given their positioning around price and incrasingly poor in-store experiences.

    The smaller players may only just scratch the surface but you do wonder that if the market was more evenly distributed – and there was less incentive for the two big guns to go head to head and use the dumb tools of price promotion to compete (i.e. if share wasn’t as even at the top price promotion might not be such an significant lever, and there might be more scrutiny on the #1 to not abuse their market power) – that there might be some more innovation in positioning or pricing strategy, or an opportunity to invest in growing market share beyond just dropping prices. Us consumers of course aren’t completely blameless in this either, but the vasst majority of the market and sales don’t really consider these issues when making purchasing decisions, or at least they don’t actively change their behaviour or preferences as a result.

    Perhaps with Aldi tipped to reach over 15-20% share in the coming years there will also be some additional opportnity for suppliers to improve their bargaining position against CWs, but you’d need to be pretty well positioned as a supplier to be able to walk away from over 70% of the distribution to your end consumers.

    Likely to get worse before it gets better, I’d say!

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  20. I think this blog emphasises the power Coles and Woolies have in the supermarket industry. Coles were actually successful at pressuring their smaller suppliers to give them a percentage rebate due to the significant portion of the sector they obtain. If small suppliers were to refuse they could potentially lose almost 50% of market share (assuming Woolies and Coles are 50/50) forcing them to oblige. It is inevitable that Coles and Woolies will remain the major players due to a number of factors including location, accessibility, brand awareness, product assortment etc. Although with this tech savvy generation and how easy it is to compare prices, the vast majority will just enter one of these supermarkets and purchase their groceries without the knowledge that they could be getting ripped off.

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  21. Further to my original reply… Aldi is certainly starting to make their presence felt in the grocery market. This article from today’s Oz talks about Aldi pushing more into the mid-market territory occupied by Colesworths through impriving store design in certain areas with the potential for higher protifability through improving share of wallet, and entering into the fresh fruit and veges space, which traditionally has much higher profitability. They’ve redesigned these so-called ‘experimental’ stores to focus on fresh fruit/veges/flowers on entry.

    Interestingly too – they are also the largest retailer of ski equipment in Australia – a range diversification strategy that perhaps Woolworths might consider (for hardware) in it’s battle against Bunnings instead of sinking another few hundred million dollars into Masters!

    http://www.theaustralian.com.au/subscribe/news/1/index.html?sourceCode=TAWEB_WRE170_a&mode=premium&dest=http://www.theaustralian.com.au/business/companies/aldi-may-turn-the-tables-on-woolworths/story-fn91v9q3-1227358214183?memtype=anonymous

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  22. Thanks for writing about this issue, one of those ‘wicked’ problems, with no easy answer. As you intimate, the long term cost to the economy and consumers of this powerful oligopoly is high. I think its evident in many responses, that given the choice most people would not elect to purchase goods at prices so low producers and manufacturers are sent to the wall. But not everyone has that choice I guess, due to either location or economics or other variables. As long as there are people who buy cheap produce on mass, either by choice or through necessity, there will always be the likes of Coles and Woolworths there to provide.
    Given the market share of each of these companies, it would seem the only thing likely to change the behaviour of Coles and Woolworths is people power.

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    • Thanks for responding.

      A timely warning was sounded a few years ago by the CEO of Heinz when he was speaking about the Australian market and commented on private label brands and discounting by ColesWorths in general ,”The reality on Australia [is that it has] almost come to the point that it’s … immaterial to us going forward because it has taken such a hit. We are confronting a combination of weak categories, relentless promotional pressure and growing private label, as well as executional issues.” He went on to call it an ”inhospitable environment” for suppliers and ”the worst market” where consumers would ultimately pay the price. And he is not a farmer!

      http://www.smh.com.au/business/heinz-hits-out-at-home-brands-20111121-1nr1l.html

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  23. Suppliers will be in most dangerous situation when retailers are having more power. This demand decrease the supplier bargaining power and though marketing makes the company growth higher but still there are so many hidden facts around the corner.

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  24. I started shopping at Coles when they started dropping prices about 2 yrs ago. When comparing our shopping supply prices from Woolies and Coles, we were saving about $10-20 at Coles.
    I’ve brought this to the attention of my family as well and we all shop at Coles. However recently when I was approached with the coles online shopping, I actually tried ordering the same shopping list on Coles online and Woolies online and found that I would be saving about $15-20 at Woolies!
    So now I dont want to change my store but Woolies stores are very appealing and looks clean and deffinetly got more variety of choice!

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    • Thanks for your post.

      There was a good story taken from “The Checkout” which was posted under “recommended Viewing” in the Learning Resources for this topic. Apart from the comparison between Coles and Woolworths it went into some detail regarding the two online offerings and how prices differ between the two. Very interesting indeed.

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  25. This is certainly a topic that gets discussion rolling. It certainly highlights the relationship between suppliers and retailers and the impact when one of those players is significantly bigger than the other. That to me is the major issue ColesWorth have by far a monopoly in the supermarket sector and as a result suppliers have no choice. I think that is fundamentally uncompetitive. Its more concerning when your consider the business these chain own in addition tot he supermarket. Woolworths for example is one of the largest pokie machine owners in Australia, owns Masters(just) and Dan Murphy, Big W and DickSmith to name a few. This control of the retail sector cannot be good for consumers and simply doesn’t give suppliers a choice.

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  26. Not only are these two giants dictating price to suppliers, they are also heavily influencing their practices. When they recently changed their stance on certain products (RSPCA approved chickens, sow free pork), this meant the farmers had to comply in order to continue supplying Coles/Woolworths. Whilst this may have been in response to customer preferences, I wonder what other practices they have influenced where customer needs were not the first priority??

    Coles are aware of the customer sentiment highlighted in your blog and the responses above. In the past couple of years Coles have run TV ads with their “happy” suppliers/farmers. Obviously they are trying to convince customers that they have good relationships with their suppliers. I don’t think these ads fooled anyone. At the end of the day both companies are accountable to their shareholders which means they need to turn big profits. Sales performance helps achieve this as does keeping supplier costs low. I doubt the practices highlighted in this blog will change any time soon.

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    • Thanks for your reply.

      My blog highlighted the negative aspects of the power of the big two supermarket behemoths. Quite simply when researching the topic it was pretty difficult to find positive good news stories about the two; of which I am sure there are some. I personally know some business people who have very good relationships with ColesWorths and do well financially – but they never really feel safe. Trust and respect are crucial in channel management and the evidence that I uncovered indicated that there was a distinct lack of both in the relationships with ColesWorths.

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  27. Coles and Woolies have been ruthless with supply partner. Forcing them to cut their prices, to switch to supplying house-brands, and so even cheaper products – milk is the standout example; and making it hard for their branded products to get shelf space.I don’t think that the price war is a long term solution for the supermarkets

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  28. We as consumers drive this behaviour and until consumers are willing to pay the “just price” of goods and not just chase the cheapest price being offered then we will continue to see Coles and Woolworths continue putting pressure on their suppliers. It will be interesting to see as the world becomes more populated and food becomes more scarce whether suppliers will have more influence in the future.

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    • Thanks for your reply.

      You could be right. As food scarcity on a global scale increases, Australian farmers may do better for themselves by exporting. Our fresh food is highly regarded around the world and as the standard of living rises throughout Asia demand for these products will soar.

      Aldi could also cause “disruption” in this space as well.

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  29. This is a good post; you have clearly brought out the real situation of the supermarket. Coles and Woolworths are both powerful to influence the market; they are easy to control the cost and bully the small retail stores or suppliers. They both create their home brand and promote them as cheap as possible; the quality should be worse than other expensive brand.
    Consumption is depends on the needs of customers; see if they prefer to get better quality or just lower price. This shows that price is only a part of elements which can affect the choice of consumers. Even there is Australian Competition and Consumer Commission (ACCC) to enforce the market to be fair; the bigger organizations still have strong power to influence the market.
    Looking forward to see the emerge of the real fair competitive market for all kind of competitors.

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  30. This is really a good blog. I was always confused where to buy products either in coles or woolworths. I see quotations like “cheep cheep” and ” Down Down” in coles and woolworths, but wonder why they are selling at low prices. The home brand products we see at store are very low in price, i came to know why they are cheap than other brands by reading this blog. The blog has show a clear view on different aspects, between the two leading competitors “coles” and “woolworths”. Thank you for the blog.

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  31. It’s interesting the competitive business model both organisations, by lowering costs so much the only way they can continue is by: 1. Selling large amounts of products. 2. Reducing purchase prices.

    This is great for consumers now but if purchase prices are still being lowered, farmers cannot continue for the low costs and small grocers will be run out. Once this happens both chains will have a monopoly and then they can name their own prices….

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  32. Very interesting post. Both coles and woolies are big bullies as far as I’m concerned, pushing around the little guy (farmer that really has no choice but to comply). I don’t think either organisations would have tried this when they were only starting out.
    Fair-trade should be mandatory in supermarkets. I find it disgusting that dairy farmers have been paid less than production for their products.

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  33. I simply see this as business. Yes its bad for the agriculturists and other people who tackle these expenses in the production network, however I wager in the event that they were offered the decision of not having an agreement with Coles and Woolworths they would not take it. Since these general stores overwhelm the business sector, they offer more drain and bread then anyplace else and accordingly, a greater amount of the agriculturists produce gets sold which is useful for ranchers. This is only one of the tragic pitfalls of working with the huge players.

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  34. This is indeed an excellent blog showing the other side of the coin. True when you have questioned , How many of us actually go that extra mile , to calculate the profit of the grower , every time we buy things at reduced prices ? It’s a human tendency to get attracted to those discounted prices. If you think from individual’s point of view,

    Producer’s /Grower’s perspective :
    Have no option but to give into the whims and fancies of the two giants, to avoid any possible bizarre outcome. If smaller businesses are approached to sell their produce, the very fear of they facing losses along with the retailers grip in . It is always a gamble choosing, best of the worst or worst of the best.

    Retailer’s perspective :
    If their competitor tries to attract their customers by reducing their prices, in order to avoid the change in customer’s choices , they bring their prices much lower . This totally undermines the efforts of the producer. Its all about the competition in the end. Survival of the fittest unfortunately.

    Consumer’s perspective :
    Totally unaware of the actual costs , just are concerned with the affordability. Best product at best prices.

    I would only say, its totally at the producers will to choose to take the risk of opting for another retailer or continue to face the harsh consequences. I do agree ita unfortunate , that business comes above compassion in the recent times. Nevertheless, business and risk go hand in hand.

    This post totally enlightened us and made us question if we are doing the right thing going for “cheap cheap” items. Thank you !

    Like

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